Obama makes it harder for firms with labor violations to get U.S. pacts

President Obama ordered prospective federal contractors to disclose labor law violations dating back three years and directed his agencies to take those violations into account when handing out federal contracts. (Getty Images)

Saying he won't let the threat of a Republican lawsuit "stop me from doing what needs to be done," President Obama signed an executive order designed to make it tougher for companies to win federal contracts if they violate their workers' rights.

With labor activists and business leaders at a signing ceremony Thursday at the White House, Obama ordered prospective federal contractors to disclose labor law violations dating back three years and directed his agencies to take those violations into account when handing out federal contracts.

Obama said he'll continue using his executive authority to accomplish things that he can't persuade Congress to tackle, mocking House GOP lawmakers for approving a lawsuit Wednesday against him in federal court for allegedly exceeding his executive authority.

"I'll wash their car, walk their dog," Obama said, joking that perhaps Republicans in Congress aren't enacting his agenda because they can't find the time. "I mean, I'm ready to work with them any time that they want to pursue policies that help working families."

Advertisement

The promise of more unilateral actions drew more complaints from GOP leaders.

"Every time the president rewrites a law unilaterally and declines to enforce the laws of our nation as they're written, it conveys not strength but weakness," House Speaker John A. Boehner (R-Ohio) said.

But the likelihood of more in-house actions by Obama looms in the near future, and the White House is ramping up expectations that he is thinking big.

The president has set an end-of-summer deadline for evaluating executive actions he could take to ease the crisis at the border and other problems with immigration policy.

"Where they're doing so little or nothing at all," Obama said of Republicans, "we've got to take action as an administration."

The Fair Pay and Safe Workplaces Executive Order affects only new federal procurement contracts valued at more than $500,000 and will be implemented in stages starting in 2016. The Labor Department estimates that there are some 24,000 businesses with federal contracts, employing about 28 million workers.

The new process is designed to encourage companies to settle existing disputes with workers by paying back wages and making other amends. The order also requires that workers get information each pay period that helps them verify the accuracy of their paychecks.

In addition, the order puts an end to mandatory arbitration agreements at corporations. Administration officials said that change will guarantee that workers who have been sexually assaulted or had their civil rights violated will get their day in court.

Business leaders expressed concern about the new order because of its potential effect on the due-process rights of federal contractors.

"While we appreciate efforts to ensure contractors comply with complex laws, the subjective nature of the order opens the door to favoritism and abuse of government contractors by administration officials," said Geoff Burr, vice president of government affairs for the Associated Builders and Contractors.

The order requires that federal procurement officers essentially act as enforcers of labor laws that even the Labor Department itself has difficulty understanding, said Joe Trauger, vice president of human resources policy for the National Assn. of Manufacturers.

"Effectively, the president is sanctioning a practice known as blacklisting companies from federal contracts due to even minor infractions of complex labor laws under the Fair Labor Standards Act," Trauger said.

But labor leaders applauded the change for its emphasis on the importance of following current workplace law. Obama is underscoring the idea that, "if you are breaking the law, you don't get to do business with the biggest employer in the country," said Joseph Geevarghese, deputy director of the Change to Win labor federation.

In effect, the order will ensure that taxpayers aren't supporting companies that "discriminate, steal wages or fail to protect the health and safety of their employees," said Wade Henderson, president of the Leadership Conference on Civil and Human Rights."

"Each year, the government contracts with companies that routinely violate workplace health and safety protections, engage in race and sex discrimination, and illegally withhold employees' wages," Henderson said. "By cracking down on federal contractors who break the law, the president will help ensure that all hardworking Americans get the fair pay and safe workplaces they deserve."